It’s easy to get desperate and go with the first lender that gives you an offer. But what many don’t realize is that a little gap in loan terms can mean the difference between saving on your boat loan payments or not, maybe even getting the boat you want.
You see, it’s more than just getting financing; it’s also about finding the right one. To help guide you in your journey towards finding the right boat loan, we have compiled some neat tips and tricks you can integrate into your game strategy so you can be confident to arrive at the right loan program.
Check your FICO
First things first, it’s important to know where you stand on the financing scale. Lenders determine your creditability as a borrower by looking at your credit score. Your credit score tells your lender how good you are at paying back your debts, so when they see a good score (usually determined by FICO), they are more likely to approve your application.
A good credit score is around 640 and above. You can check your score for free at annualcreditreport.com.
Another reason why you should take time checking your score before you apply is to determine any inconsistencies in your record. These are those reports that are erroneous. It could be a debt you didn’t take, or a payment that wasn’t recorded. This way, you have time to dispute any faulty claims and iron out the damage it caused to your score.
It is imperative that you inform the people involved in your dispute – the credit reporting agency, the creditor, or your lender.
Scrutinize the terms
This includes how the interest and payment are structured, whether you will be paying more on interests on the first half of the life of the loan, the other way around, or whether they are distributed evenly.
Another thing, and perhaps one of the most important element for comparison is the offered rate. It also pays to check if there are pre-payment penalties that the lender will impose should you decide to pay off the loan earlier.
A single point difference in loan rates may seem insignificant to you but could mean thousands of dollars on boat loan savings throughout its entire term. But if course, it’s not enough to just look at the rates per se without taking into consideration the various other factors that may be used by the lender to compensate for a lower rate.
For example, lower rates may mean more down payment requirement, or additional fees and charges. Rates may also be dictated by the age and model of the boat.
Take ads with a grain of salt
Most likely, these ads that sound too good to be true are primarily based on best-case scenarios. Lenders will always compensate for a perk. For example, if the advertised rate is low, you are more likely going to be required to pay more on the loan processing, or will be asked to put more money as down payment.
Consider other loan options
A Home Equity Line of Credit (HELOC) allows you to tap into your home equity, the proceeds of which you are free to use as you see fit. The same thing about a personal loan. If you cannot find a good boat financing program that answers to your needs, it might be wise to shift your perspective and look at other options.
Ask about the real cost of the loan
Fees on processing, taxes, filing and registration are just some of the most common fees you need to pay at closing. Before the designated closing date, make sure to ask the lender what these costs are so you will not be surprised by the amount of money you need to shell out. This way, you can plan your finances accordingly and make adequate decisions as to your ultimate choice for financing.
Learn how much you need to pay monthly
Get an estimate of your loan and how much you will end up paying on a monthly basis. This allows you to see how much of your monthly income goes to the payment of your debts. Would it be manageable or would it potentially cause you too much debt strain?
Be smart. Pay attention to the details, and never rush. Buying a boat is probably one of the biggest investments you will make in your lifetime. Do it right.